Final Results

RNS Number : 3153F

Aberdeen Emerging Markets Inv Co Ld

19 February 2018

ABERDEEN EMERGING MARKETS INVESTMENT COMPANY LIMITED

LEI: 213800RIA1NX8DP4P938

A UK-listed investment company, seeking consistent returns from a diversified portfolio of emerging market funds

Annual Report and Accounts

FOR THE YEAR ENDED 31 OCTOBER 2017

Financial Highlights

Aberdeen Emerging Markets Investment Company Limited ("AEMC" or the "Company") is a closed-end investment company with its Ordinary shares listed on the premium segment of the London Stock Exchange. It offers investors exposure to some of the best investment talent within the global emerging markets of Asia, Eastern Europe, Africa and Latin America.

The Company is governed by a board of directors, the majority of whom are independent, and has no employees. Like most other investment companies, it outsources its investment management and administration to an investment management group, Aberdeen Standard Investments (the investment arm of the Standard Life Aberdeen plc group of companies).

Net asset value ("NAV") per ordinary share total return*		NAV per ordinary share**
+14.9%		706.0p
2016	+36.4%	2016	618.8p
Share price total return*		Ordinary share price - mid market
+17.0%		632.5p
2016	+36.1%	2016	545.0p
MSCI Emerging Markets Net Total Return Index in Sterling terms		Net Assets
+16.6%		£361.5million
2016	+37.7%	2016	£320.2million
Gearing***		Ongoing charges ratio ('OCR')
+6.0%		+1.07%
2016	nil	2016	1.10%
Dividends per share****		Revenue return per share
10.0p		-0.68p
2016	nil	2016	-0.45p
*Performance figures stated above include reinvestment of dividends on the ex-date
See the Notes to the Financial Statements for basis of calculation *Based on the net of the drawn down loan value and cash, as a percentage of NAV
****Dividends declared for the year in which they were earned

Investment Objective

The Company's investment objective is to achieve consistent returns for Shareholders in excess of the MSCI Emerging Markets Net Total Return Index in Sterling terms (the 'Benchmark').

Investment Policy

The Company's investment policy is included in the Annual Report and Accounts.

Benchmark

MSCI Emerging Markets Net Total Return Index in Sterling terms.

Management

The Company's Alternative Investment Fund Manager ("AIFM") and Investment Manager is Aberdeen Fund Managers Limited ("AFML", "Manager", "Investment Manager" or "AIFM"), a wholly owned subsidiary of Aberdeen Asset Management PLC (the "Aberdeen Group") which merged with Standard Life plc on 14 August 2017 to form Standard Life Aberdeen plc.

The Company's portfolio is managed by Aberdeen's highly experienced Closed End Fund Opportunities ("CEFO") team, which is amongst the most experienced of any operating globally with a similar strategy. Further details of the team and the investment strategy and process are included in the Annual Report and Accounts.

Financial Calendar

29 March 2018	First interim dividend payable for year ended 31 October 2018
12 April 2018	Annual General Meeting (Guernsey)
June 2018	Second interim dividend payable for year ended 31 October 2018
June 2018	Announcement of Half-Yearly Financial Report for the six months ending 30 April 2018
September 2018	Third interim dividend payable for year ended 31 October 2018
December 2018	Fourth interim dividend payable for year ended 31 October 2018
January/February 2019	Announcement of Annual Report and Accounts for the year ending 31 October 2018

CHAIRMAN'S STATEMENT

Overview

Over the year to 31 October 2017, the Company's net asset value ("NAV") total return was 14.9% and the share price total return was 17.0% (all in Sterling terms). Over the same period the Company's benchmark, the MSCI Emerging Markets Net Total Return Index (in Sterling terms), recorded a total return of 16.6%.

Stock markets fell sharply at the beginning of the financial year following Donald Trump's victory in the US presidential election campaign, driven by concerns of protectionist policies and the implications of a strengthening US Dollar. These fears proved to be short-lived. Markets recovered quickly and made steady progress during the rest of the year, benefitting from improving corporate profitability and increasing inflows from global investors.

The strongest performing region during the year was Emerging Asia, in particular China and South Korea. The returns from these countries were largely driven by the performance of a small number of technology and internet companies. The portfolio's underweight exposure to China and the technology sector were the main detractors from relative performance for the year. However, on the positive side, there were a number of strong performing holdings in the portfolio, with many of the closed-end fund holdings benefitting from narrowing of the discounts to NAV at which their shares trade.

A more detailed explanation of the year's performance is provided in the Investment Manager's Report.

The Board is pleased with the progress made by the Company with regard to revised management arrangements, the diligent implementation of the investment process and the improved performance that has resulted. In the three years to 31 October 2017 the Company has:

· Outperformed its benchmark index, with a NAV total return of 44.2% compared to the 42.3% return from the benchmark index

· Outperformed its Direct Peer Group* of global emerging market investment companies with the NAV total return of 44.2% being comfortably ahead of the peer group average of 33.7%

· Delivered a share price total return in excess of any of its Direct Peer Group (share price total return of 45.1% compared to the Direct Peer Group average of 28.0%)

*The "Direct Peer Group" referred to above includes the Company, Fundsmith Emerging Equities Trust plc, Genesis Emerging Markets Fund Limited, JPMorgan Emerging Markets Investment Trust plc, JPMorgan Global Emerging Markets Income Trust plc and Templeton Emerging Markets Investment Trust plc. All numbers quoted are in Sterling terms and sourced from Bloomberg.

The Company's shares ended the year trading on a discount of 10.4%, compared to 11.9% at the beginning of the year. Although the discount is not out of line with most of the Direct Peer Group, the Board is cognisant of the discount to the NAV at which the Company's shares trade, despite the improving trend in performance. Accordingly, the Board has taken a number of measures with the objective of fully utilising the benefits of the closed-end structure whilst also ensuring the Company is made appealing and accessible to as wide an audience of investors as possible. The measures adopted are as follows, and are described in more detail in the paragraphs below.

· Introduction of a dividend policy

· Use of gearing through the introduction of a £25 million credit facility

· Reduction in the rate of the basic management fee

· Removal of performance fee arrangements

· Use of share buyback powers in accordance with the Company's stated discount management policy

· Participation in the Aberdeen Investment Plans and promotional programme

In addition, the Board is today announcing proposals for a tender offer for up to 10% of the Company's ordinary shares in issue at a price reflecting a discount of 3.5% to NAV.

Dividends

During the year, the Board announced its intention to commence making distributions by way of dividends to be funded from a combination of income and capital. This measure was adopted in the belief that the level of dividends paid by emerging market companies over the long term is an increasingly important attraction for investors seeking to invest in the emerging market asset class. Consultation with existing and prospective shareholders on this topic was supportive of this view.

A first interim dividend of 5.0p per share in respect of the year ended 31 October 2017 was paid on 29 September 2017 and a second interim dividend of 5.0p per share was paid on 29 December 2017. In respect of future financial years, it is anticipated that four interim dividends will be paid on a quarterly basis, in March, June, September and December.

The Board is mindful of the desirability to investors of growth in the absolute level of the dividend over time. Accordingly, the Board declares a first interim dividend in respect of the year ended 31 October 2018 of 5.25p per share and, in the absence of unforeseen circumstances, anticipates declaring three further interim dividends of at least 5.25p per share. It is therefore anticipated that the total dividend for the year will be no less than 21p per share.

The first interim dividend for the current financial year, of 5.25p per share, will be paid on 29 March 2018 to shareholders on the register on 2 March 2018.

The Board will put a resolution to shareholders at the Annual General Meeting in respect of its policy to declare four interim dividends each year, and will include this as a resolution at future Annual General Meetings.

The payment of any dividends will be subject to compliance with all necessary regulatory obligations of the Company, including the Companies (Guernsey) Law solvency test, compliance with its loan covenants, and will also be subject to the Company retaining sufficient cash for its working capital requirements.

Loan Facility and Gearing

During the year the Board was pleased to announce that the Company had entered into a one year £25 million unsecured multicurrency revolving loan facility. The Board believes that the use of gearing, which is one of the advantages of a closed ended structure, within pre-determined ranges and at times when the Investment Manager sees attractive investment opportunities, will be beneficial to the longer term performance of the Company. £25 million of the facility was drawn down at the year-end, representing gearing, net of cash, of 6.0%.

The Company has commenced discussions with its bankers and the Board expects to renew the facility on similar terms when it matures in March this year.

Management Fee Arrangements

Basic Management Fee

Throughout the year, the management fee payable by the Company was charged at an annualised rate of 1.0% of adjusted market capitalisation, reduced by the proportion of its net assets invested in funds which are managed by Aberdeen Standard Investments ("Aberdeen Standard Funds").

As referred to above, and previously announced, with effect from 1 November 2017 the annual management fee was decreased to an annualised rate of 0.8% of net assets, reduced in the same manner for any investments in Aberdeen Standard Funds. At 31 October 2017, 7.1% of the Company's net assets were invested in Aberdeen Standard Funds. Based on the value of the Company's net assets at the year end, it is estimated that the revised fee structure will result in an annualised management fee of 0.7% of net assets (allowing for such Aberdeen Standard Funds), compared to an actual rate of 0.8% of net assets for the year ended 31 October 2017.

The Board believes the revised arrangements represent good value for shareholders. The revision was considered in the context of the overall expenses of the Company in absolute terms and relative to peer group funds.

Performance Fee

Following consideration of fee arrangements and the Company's level of ongoing charges, the Manager and the Board have agreed that the performance fee arrangements should be removed, to take effect from 1 November 2017. The Board believes this change enhances the attractiveness of the Company to both existing and potential investors.

Discount and Share Buy Backs

The discount of the share price to NAV at the end of the year was 10.4%. The Board monitors the discount on an ongoing basis. During the year, and in accordance with its stated discount management policy that, in normal market conditions, the shares should trade at a price which on average represents a discount of less than 10% to the NAV, the Company bought back 551,450 ordinary shares to hold in treasury, representing 1.1% of the shares in issue at the start of the year.

The Board will continue to consider the use of share buybacks when, in its opinion, and taking into account factors such as market conditions and the discounts of comparable companies, the Company's discount is higher than desired and shares are available to purchase in the market. Shares held in treasury may only be resold at a price that represents a premium to the prevailing NAV per share.

Aberdeen Investment Plans

Following the acquisition of the Company's previous investment manager by Aberdeen Asset Management PLC in December 2015, the Board agreed that the Company would participate in the investment plans provided by Aberdeen, which include an Investment Plan for Children, a Share Plan and an Individual Savings Account ("ISA"). In addition to other promotional activities carried out by the Company, the Board hopes that this will help to generate additional demand for the Company's shares. Details are provided on provided in the Annual Report and Accounts.

Continuation Vote and Tender Offer

Under the terms of the Company's Articles of Incorporation, the Board is required to propose an ordinary resolution at the forthcoming Annual General Meeting that the Company continues in existence (the "Continuation Resolution").

In accordance with the Articles, if the continuation vote is passed by shareholders then there will be a further continuation vote in 2023 and at every fifth Annual General Meeting thereafter. If the continuation vote is not passed then, within four months of the vote failing, the Directors shall formulate and put to shareholders proposals relating to the future of the Company having had regard to, inter alia, prevailing market conditions and applicable regulations and legislation.

The Board understands that, whilst the large majority of shareholders by total number of shares held are supportive of the measures taken to make investment in the Company's shares more appealing, and of the continuation of the Company, there is potentially some appetite for liquidity that can be provided by a tender offer. Accordingly, in conjunction with the Continuation Resolution, shareholders will also be asked to approve a tender offer for up to 10% of the Company's ordinary shares in issue at a price reflecting a discount of 3.5% to NAV. Shares tendered above the basic entitlement of 10% will be satisfied (on a pro rata basis) to the extent that other shareholders tender less than their aggregate basic entitlement.

Assuming it is fully subscribed, the costs of the tender are anticipated to be more than offset by the uplift in NAV once the relevant shares have been purchased by the Company.

The record date for participation in the tender will be 20 February 2018 and the Company expects to publish a circular containing the notice of the Annual General Meeting and the notice of the Extraordinary General Meeting required to approve the tender offer in the coming weeks. The resolution to approve the tender will be conditional on the approval by shareholders of the Continuation Resolution.

It is expected that the Annual General Meeting and the Extraordinary General Meeting will both be held on 12 April 2018. Further details will be included in the circular.

Board Composition

Following the retirements of Terry Mahony and Richard Bonsor earlier in the year, the Board was pleased to announce the appointment of Mark Barker as an independent non-executive Director on 21 July 2017. Mark is Managing Partner of Strategic Capital Investors, a boutique investment company, and has over thirty years of investment experience specific to fund of funds. His understanding of risk, portfolio construction and his success in building funds in terms of assets and performance will prove very valuable to Board deliberations.

Manager

The Board notes the recent completion of the merger between Aberdeen Asset Management PLC ("Aberdeen"), which is the parent company of the Manager, and Standard Life PLC whereby Aberdeen has become a wholly owned subsidiary of Standard Life Aberdeen plc. The Board will continue to monitor developments closely to ensure that satisfactory arrangements are in place for the continued effective management of the Company.

Outlook

Strong corporate earnings growth and a marked improvement in sentiment towards the asset class have supported the significant gains seen in emerging markets over the past two years. The asset class has, and continues, to benefit from an improved global macro-economic environment, with recovering growth combined with moderate inflation, healthy trade flows and stable currencies. With emerging market equities trading at reasonable valuations we believe the prospects remain encouraging and the risks of less accommodative global monetary policies, ongoing trade negotiations and a busy political calendar do not undermine the fundamentally positive case for investing in emerging markets.

As we have stated before, the Board believes that shareholders benefit from the diversification provided by the Company's approach of investing through a portfolio of specialist funds run by talented managers with strong investment propositions. When combined with the measures adopted during the year as described above, the Board believes that the Company is an attractive means for investors to benefit from the long term attractions of emerging markets.

Mark Hadsley-Chaplin

Chairman

19 February 2018

INVESTMENT MANAGER'S REPORT

During the financial year the Company's net asset value ("NAV") per ordinary share total return was 14.9%, while the MSCI Emerging Markets Net Total Return Index (the "Benchmark") gained 16.6%. The share price total return was 17.0%, with the discount to NAV at which the Company's shares trade narrowing to 10.4% at year end, compared with 11.9% at the start of the financial year.

The Company's NAV return trailed the gain seen in the Benchmark Index by 1.7%. We consider this as a reasonable outcome given the significant contribution of a small number of large e-commerce, social networking and technology companies to the benchmark return over the year. For example, in China, Tencent and Alibaba comprise 32% of the MSCI China Index and were responsible for 46.3% of the overall index gain, while in Korea and Taiwan, Samsung Electronics and Taiwan Semiconductor comprise 34% and 32% respectively of the relevant MSCI indices and contributed 57.1% and 57.4% of the index gains. Our strategy results in a diversified portfolio that avoids the kind of stock specific risks presented by concentrated indices.

As a result of the extremely strong performance of the small number of companies noted above, the portfolios of certain of the Company's Asian investments failed to match their benchmarks. These included, The China Fund Inc, Fidelity China Special Situations PLC, Weiss Korea Opportunity Fund Limited, Korea Value Strategy Fund Ltd and Schroder International Selection Taiwanese Equity Fund. Notwithstanding this, a number of underlying managers performed admirably, most notably Neuberger Berman - China Equity Fund (which closed to new money post the year end), Schroder Asia Pacific Fund PLC, BlackRock Emerging Europe PLC and Russian specialist Verno Capital Growth Fund Limited.

Discount narrowing in the Company's closed end fund investments was materially positive during the period. This is consistent with improving sentiment towards the asset class but was also the result of pending liquidity events on specific holdings. BlackRock Emerging Europe PLC's discount narrowed from 11.2% to 5.0%, in part driven by the fact that it will provide shareholders with an opportunity to realise the value of their investment in the trust at NAV less applicable costs in 2018. BlackRock Latin American Investment Trust PLC's discount narrowed from 13.8% to 9.5% and The China Fund Inc saw its discount narrow from 13.8% to 9.5%.

A negative contribution from Asset Allocation was driven by an underweight exposure to China, where those same internet related stocks drove the overall market returns. China now accounts for 29.7% of the emerging market index and was the best performing of the major emerging markets over the course of the financial year, gaining 30.0%. The Company's overweight position in Russia was also a detractor. Positive contributions came from the decisions to run underweight allocations to Brazil, South Africa and Qatar.

NAV performance attribution for the year ended 31 October 2017

Fund Selection	(1.6%)
Asia	(2.3%)
EMEA	0.5%
Latin America	0.2%
Asset Allocation	(0.9%)
Asia	(0.8%)
EMEA	(0.3%)
Latin America	0.2%
Cash (direct and underlying)	0.0%
Discount Narrowing	1.6%
Fees and Expenses	(0.8%)
Net asset value under performance*	(1.7%)
* The above analysis has been prepared on a total return basis.

Market environment

The financial year proved rewarding for emerging market investors. The surge in the dollar and bond yields following the US presidential election proved short-lived, with concerns related to protectionist and anti-immigration policies receding rapidly. The rally was supported by generally buoyant economic growth and currency stability in emerging markets combined with an improving trend in corporate earnings. Presented with such a positive backdrop, global investors returned to the asset class in force. The 17.0% share price return of the Company represents material outperformance of developed markets (MSCI World Index +13.1%).

In a regional context, Emerging Asia was the best performing area, gaining 16.6% with all the larger markets in the region posting double digit gains. Chinese equities rose by 30.0% with sentiment towards the market supported by index provider MSCI's announcement that domestic Chinese stocks would be included in its China index in mid-2018. The final month of the financial year saw President Xi Jinping set out a vision for his second term at the 19th Communist Party Congress and local equities reacted positively. South Korean stocks posted a gain of 29.4% as the performance of Samsung Electronics propelled the market higher despite tensions over North Korean missile tests. The country saw the election of Moon Jae-in as South Korean president in early May which was well received. South Korea's relations with China improved towards the end of the period after the resolution of differences over the deployment of the US THAAD anti-missile system. The Taiwanese market returned 15.9% with Taiwan Semiconductor leading the way. The Indian market gained 13.6%, recovering strongly after the unexpected removal of large denomination notes from circulation in late 2016 and the implementation of the Goods and Services Tax over the summer. The final month of the period saw the announcement of a significant recapitalisation plan for state controlled banks and news of a major transport infrastructure initiative. Pakistan entered the emerging market index at the start of June and declined 19.6% over the remainder of the period as the anticipated inflows from global investors failed to materialise, political uncertainties saw President Sharif removed from office in July and investors began to question the stability of the Pakistani Rupee. South East Asian markets also fared poorly with Malaysia, Indonesia and the Philippines all declining.

The Emerging Europe, Middle East and Africa index returned 5.8%. The Russian market rose by 7.5% moving in lockstep with oil prices for much of the year. Polish and Hungarian equities fared well, posting gains of 39.3% and 29.8% respectively as economic activity strengthened and both markets saw strong flows into blue-chip stocks. The Egyptian market declined 31.0%, a consequence of the devaluation of the Egyptian pound at the beginning of the period. The South African market gained 2.6% which was driven by a 34.5% gain in Naspers, which accounts for around one third of the local index and whose underlying value driver is its investment in Chinese internet stock Tencent. The remainder of the South African market remained challenged as ongoing political turbulence and a weak economic backdrop contributed to poor investor sentiment. Qatar (-21.5%) made headlines as a political rift developed over the summer between it and a number of Arab states, led by Saudi Arabia. In Turkey (+6.4%) the most notable development was President Erdogan winning sweeping new powers following a constitutional referendum in April.

The Latin American regional index rose by 1.5%. Mexican equities lost 5.6% as the Mexican peso bore the brunt of swings in sentiment, most notably in the immediate aftermath of the US presidential election and again towards the end of the period with increasing uncertainty surrounding the North American Free Trade Agreement renegotiation process. The region's other major market, Brazil, gained 1.1%, with politics returning to the fore as corruption allegations emerged over the summer against President Temer which will likely delay the reform process.

Portfolio

At the end of the period, the portfolio comprised 34 positions with the top 10 accounting for 57.3% of net assets. During the period a £25 million gearing facility was introduced and deployed, making the portfolio fully invested, even when accounting for look through cash in underlying investments. The facility benefitted performance over the period it was in place.

The investment of the gearing facility combined with a general trend towards reflecting greater conviction in the portfolio resulted in an increase in exposure to open ended funds, where we benefit from superior liquidity and a greater universe of managers from which to choose. The balance between closed and open ended exposure will vary over time, dependent on a broad range of factors.

The average discount on the closed end portion of the portfolio at the end of the period was 10.7%, marginally narrower than the 11.5% at the start. The overall composition of the portfolio by type of vehicle is shown below.

	31 October 2017	31 October 2016
Closed end investment funds	54.3%	60.7%
Open ended investment funds	47.2%	36.4%
Market access products	4.5%	2.5%
Cash and other net assets	-6.0%	0.4%

The most significant new addition during the year was the initiation of a holding in Laurium Capital International Cayman Feeder SP ('Laurium Limpopo Fund'), an Africa ex-South Africa focused vehicle run by Laurium Capital, a Johannesburg-based investment manager. We had researched the Laurium team for a number of years and followed the evolution of this vehicle. We selected the fund for its opportunistic and value driven approach to investing in markets that include Egypt, Kenya, Nigeria and Morocco. At the time of investment in August, Africa was firmly out of fashion. The travails of the last few years (commodity price declines, currency devaluations, fund outflows and closures) had, once again, convinced investors that Africa is not a compelling investment destination. We are attracted by this negativity, which is reflected in depressed valuations and undervalued currencies. The pricing of African assets is often inefficient and we believe Laurium Capital to be an excellent partner through which to access these inefficiencies and the long term growth potential of the continent. Laurium Limpopo Fund accounted for 2.8% of net assets at the year end.

Elsewhere in the portfolio we continued to add to existing "best-of-breed" open ended positions in favoured parts of the world, including Findlay Park Latin American Fund ('Findlay Park'), Avaron Emerging Europe Fund and Neuberger Berman-China Equity Fund ('Neuberger'). Neuberger announced in November 2017 the closure of this strategy to new investors. We view such a decision favourably as it indicates the manager's discipline in maintaining performance as opposed to growing assets under management. In a similar vein, Ton Poh Tailand Fund, the Company's core holding in Thailand and the Mekong delta region also closed at the end of 2017 for similar reasons. In the closed end fund space we purchased additional shares in the deeply discounted Romanian fund, Fondul Proprietatea ('Fondul'). Despite political volatility in Romania, the economy continues to perform well, benefitting from its proximity to the Eurozone, and Fondul continues to rotate its portfolio and return capital to shareholders.

The Company's geographic allocation is shown on Annual Report and Accounts. The deployment of the gearing facility saw the Company move from being 96.3% invested at the end of the previous financial year to 103.8% at the end of this year. The most significant country level change in the portfolio was in China, where exposure increased by 5.1% to reach 25.7% of net assets at year end. Indian exposure was reduced from 8.3% to 4.9% over the period as marginal holdings were sold consistent with our declining conviction in the top down case for India. The Europe, Middle East and Africa region increased by 3.4% to 24.3%, as a consequence of the purchases noted above. Latin America benefitted from additional purchases of Findlay Park Latin American Fund which led to the overall regional allocation reaching 14.0%. In addition to boosting the weights of Brazil and Mexico, Findlay Park provides access to a number of interesting Andean opportunities in markets such as Colombia and Peru. The Company's exposure to frontier markets increased over the period to 8.0% of net assets. We believe many frontier markets offer compelling valuations as they remain overlooked by mainstream emerging market investors.

Market outlook

From emerging markets' low point in February 2016 to the end of the current financial year the Company has delivered a share price total return of 74.9%. This reflects a marked improvement in the fundamental outlook for emerging markets combined with a turnaround in investor sentiment, as reflected by significant inflows in 2017. After such a rally, the question facing investors is whether this positive momentum can continue through 2018. We believe it can continue and anticipate that as the rally matures, narrow market leadership will broaden out which should play to the strengths of the Company's more value-focused approach.

Emerging economies are benefitting from an improved global macro environment, with recovering growth supported by moderate inflation and healthy trade flows allowing current account positions to improve. This is, in turn, supportive of emerging market currencies, which were, in aggregate, flat in USD terms over the period as measured by the JPM Emerging Market Currency Index. The underlying companies to which the Company is exposed are, on the whole, in robust shape, with top line revenue growth and increasing margins feeding through to earnings, returns on equity and healthier balance sheets. We expect the on-going broad-based economic and earnings recovery being experienced across our investment universe to continue through 2018 and we take comfort from the attractive relative valuation of emerging market equities despite their strong performance since 2016.

Major central banks are embarking on a path towards policy normalisation with interest rates expected to rise and central bank balance sheets to shrink over the coming years. While monetary tightening has historically been perceived as a negative for emerging markets, we believe the process will be very gradual and should not disrupt sentiment. Geo-politics will most likely continue to cause occasional market panics but in our experience these bouts of risk aversion are generally short lived and the worst case scenarios seldom materialise. Such was the case following North Korea's missile and nuclear tests in 2017 and the protectionist scare following President Trump's election victory in late 2016. Observers also point to risks emanating from China as a country and economy of ever increasing scale and importance. We believe that President Xi's consolidation of power at the recent party congress should facilitate a continuation of the reform process already embarked upon. We believe that debt levels in China, particularly at the corporate (in-particular state controlled corporate) level remains worrying but are manageable within the confines of a largely closed capital account. On balance, we believe that the risks discussed above should not be ignored but they do not undermine the fundamentally positive case for investing in emerging markets and we would not be surprised to see global allocators increase their allocations to the asset class further during 2018.

Within the portfolio, we believe the underlying managers with whom the Company is invested are strong, and we are encouraged by the sensible steps being taken by certains funds to limit further inflows. We continue to run a concentrated portfolio of well structured funds managed by talented stock pickers in those markets that our top-down analysis indicates to be attractive. We believe this simple strategy, executed well, will deliver attractive risk adjusted returns for investors over the coming years as it has done over recent financial years.

Aberdeen Fund Managers Limited

19 February 2018

PRINCIPAL RISKS AND UNCERTAINTIES

Together with the issues discussed in the Chairman's Statement and the Investment Manager's Report, the Board considers that the main risks and uncertainties faced by the Company fall into the following categories:

(i) General market risks associated with the Company's investments

Changes in economic conditions, interest rates, foreign exchange rates and inflationary pressures, industry conditions, competition, political and diplomatic events, tax, environmental and other laws and other factors can substantially and either adversely or favourably affect the value of the securities in which the Company invests and, therefore, the Company's performance and prospects.

The Company's investments are subject to normal market fluctuations and the risks inherent in the purchase, holding or selling of securities, and there can be no assurance that appreciation in the value of those investments will occur. There can be no guarantee that any realisation of an investment will be on a basis which necessarily reflects the Company's valuation of that investment for the purposes of calculating the net asset value.

The Company's investments, although not made into developed economies, are not entirely sheltered from the negative impact of economic slowdowns, decreasing consumer demands and credit shortages in such developed economies which, amongst other things, affects the demand for the products and services offered by the companies in which the Company directly or indirectly invests.

A proportion of the Company's portfolio may be held in cash or cash equivalent investments from time to time. Such proportion of the Company's assets will be out of the market and will not benefit from positive stock market movements, but may give some protection against negative stock market movements.

(ii) Developing markets

The funds selected by the Investment Manager invest in developing markets. Investing in developing markets involves certain risks and special considerations not typically associated with investing in other more established economies or securities markets. In particular there may be: (a) the risk of nationalisation or expropriation of assets or confiscatory taxation; (b) social, economic and political uncertainty including war and revolution; (c) dependence on exports and the corresponding importance of international trade and commodities prices; (d) less liquidity of securities markets; (e) currency exchange rate fluctuations; (f) potentially higher rates of inflation (including hyper-inflation); (g) controls on foreign investment and limitations on repatriation of invested capital and a fund manager's ability to exchange local currencies for pounds Sterling; (h) a higher degree of governmental involvement and control over the economies; (i) government decisions to discontinue support for economic reform programmes and imposition of centrally planned economies; (j) differences in auditing and financial reporting standards which may result in the unavailability of material information about economies and issuers; (k) less extensive regulatory oversight of securities markets; (l) longer settlement periods for securities transactions; (m) less stringent laws regarding the fiduciary duties of officers and directors and protection of investors; and (n) certain consequences regarding the maintenance of portfolio securities and cash with sub-custodians and securities depositories in developing markets.

(iii) Other portfolio specific risks

(a) Small cap stocks

The underlying investee funds selected by the Investment Manager may have significant investments in smaller to medium sized companies of a less seasoned nature whose securities are traded in an "over-the-counter" market. These "secondary" securities often involve significantly greater risks than the securities of larger, better-known companies, due to shorter operating histories, potentially lower credit ratings and, if they are not listed companies, a potential lack of liquidity in their securities. As a result of lower liquidity and greater share price volatility of these "secondary" securities, there may be a disproportionate effect on the value of the investee funds and, indirectly, on the value of the Company's portfolio.

(b) Liquidity of the portfolio

The fact that a share is traded does not guarantee its liquidity and the Company's investments may be less liquid than other listed and publicly traded securities. The Company may invest in securities that are not readily tradable or may accumulate investment positions that represent a significant multiple of the normal trading volumes of an investment, which may make it difficult for the Company to sell its investments. Investors should not expect that the Company will necessarily be able to realise its investments, within a period which they would otherwise regard as reasonable, and any such realisations that may be achieved may be at a considerably lower price than prevailing indicative market prices. The Company has an overdraft facility in place which may be utilised to assist in the management of liquidity. The borrowing facility is described in the Directors' Report in the Annual Report and Accounts.

Liquidity of the portfolio is further discussed in the notes to the financial statements in the Annual Report and Accounts.

It is not the Company's present policy to engage in currency hedging. Accordingly, the movement of exchange rates between Sterling and the other currencies in which the Company's investments are denominated or its borrowings are drawn down may have a material effect, unfavourable or favourable, on the returns otherwise experienced on the investments made by the Company.

Movements in the foreign exchange rate between Sterling and the currency applicable to a particular shareholder may have an impact upon that shareholder's returns in their own currency of account.

Management or mitigation of the above risks

Risk

Management or mitigation of risk

General market risks associated with the Company's investments

These risks are largely a consequence of the Company's investment strategy but the Investment Manager attempts to mitigate such risks by maintaining an appropriately diversified portfolio by number of holdings, fund structure, geographic focus, investment style and market capitalisation focus.

Liquidity, risk and exposure measures are produced on a monthly basis by the Investment Manager and monitored against internal limits.

Developing markets

Other portfolio specific risks

(a) Small cap stock

(b) Liquidity of the portfolio

The investment management of the Company has been delegated to the Company's Investment Manager. The Investment Manager's investment process takes into account the material risks associated with the Company's portfolio and the markets and holdings in which the Company is invested. The Board monitors the portfolio and the performance of the Investment Manager at regular Board meetings.

(iv) Internal risks

Poor allocation of the Company's assets to both markets and investee funds by the Investment Manager, poor governance, compliance or administration, could result in shareholders not making acceptable returns on their investment in the Company.

Management or mitigation of internal risks

The Board monitors the performance of the Investment Manager and the other key service providers at regular Board meetings. The Investment Manager provides reports to the Board on compliance matters and the Administrator provides reports to the Board on compliance and other administrative matters. The Board has established various committees to ensure that relevant governance matters are addressed by the Board.

The management or mitigation of internal risks is described in detail in the Corporate Governance Statement in the Annual Report and Accounts.

Statement of directors' responsibilities in respect of the Annual Report and ACCOUNTS

The directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations.

Guernsey company law requires the directors to prepare financial statements for each financial period. The directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as issued by the IASB and applicable law.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period. In preparing these financial statements, the directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable, relevant and reliable;

· state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

· assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

· use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies (Guernsey) Law, 2008. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Disclosure of information to auditor

The directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, but not for the content of any information included on the website that has been prepared or issued by third parties. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the directors in respect of the annual financial report

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· the directors' report includes a fair review of the development and performance of the business and the position of the issuer, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Helen Green

Director

William Collins

Director

19 February 2018

STATEMENT OF COMPREHENSIVE INCOME

	Year ended 31 October 2017			Year ended 31 October 2016
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000

Gains on investments at fair value through profit or loss	-	46,978	46,978	-	85,180	85,180
Gains on currency movements	-	96	96	-	654	654
Net investment gains	-	47,074	47,074	-	85,834	85,834
Investment income	3,500	-	3,500	2,792	-	2,792
	3,500	47,074	50,574	2,792	85,834	88,626
Investment management fees	(2,695)	-	(2,695)	(2,107)	-	(2,107)
Other expenses	(857)	-	(857)	(736)	-	(736)
Operating profit before finance costs and taxation	(52)	47,074	47,022	(51)	85,834	85,783
Finance costs	(155)	-	(155)	(46)	-	(46)
Operating profit before taxation	(207)	47,074	46,867	(97)	85,834	85,737
Withholding tax expense	(141)	-	(141)	(136)	-	(136)
Total profit and comprehensive income for the year	(348)	47,074	46,726	(233)	85,834	85,601


Earnings per ordinary share	(0.68p)	91.68p	91.00p	(0.45p)	165.37p	164.92p

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared under IFRS. The revenue and capital columns, including the revenue and capital earnings per share data, are supplementary information prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year.

The notes form part of these financial statements.

STATEMENT OF FINANCIAL POSITION

	As at 31 October 2017 £'000	As at 31 October 2016 £'000

Non-current assets
Investments at fair value through profit or loss	383,263	318,713

Current assets
Cash and cash equivalents	3,414	2,110
Sales for future settlement	-	1,526
Other receivables	186	272
	3,600	3,908
Total assets	386,863	322,621

Current liabilities
Interest payable	35	-
Purchases for future settlement	-	2,027
Other payables	357	379
Loans payable	25,000	-
Total liabilities	25,392	2,406

Net assets	361,471	320,215

Equity
Share capital	183,930	186,840
Capital reserve	184,593	140,079
Revenue reserve	(7,052)	(6,704)

Total equity	361,471	320,215

Net assets per ordinary share	706.04p	618.79p
Number of ordinary shares in issue (excluding shares held in treasury)	51,196,729	51,748,179

Approved by the Board of Directors and authorised for issue on 19 February 2018 and signed on its behalf by:

Helen Green - Director

William Collins - Director

The notes form part of these financial statements.

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 October 2017	Share capital £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance at 1 November 2016	186,840	140,079	(6,704)	320,215
Profit/(loss) for the year	-	47,074	(348)	46,726
Dividends paid	-	(2,560)	-	(2,560)
Share buybacks	(2,910)	-	-	(2,910)
Balance at 31 October 2017	183,930	184,593	(7,052)	361,471


For the year ended 31 October 2016	Share capital £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Balance at 1 November 2015	187,725	54,245	(6,471)	235,499
Profit/(loss) for the year	-	85,834	(233)	85,601
Share buybacks	(885)	-	-	(885)
Balance at 31 October 2016	186,840	140,079	(6,704)	320,215

The notes form part of these financial statements.

STATEMENT OF CASH FLOW

	Year ended 31 October 2017 £'000	Year ended 31 October 2016 £'000

Cash flows from operating activities
Cash inflow from investment income and bank interest	3,544	2,642
Cash outflow from management expenses	(3,522)	(2,685)
Cash inflow from disposal of investments*	75,404	90,430
Cash outflow from purchase of investments*	(93,478)	(89,591)
Cash outflow from taxation	(141)	(136)
Net cash flow (used in)/from operating activities	(18,193)	660
Cash flows from financing activities
Proceeds from bank borrowings	25,000	-
Borrowing commitment fee and interest charges	(155)	(46)
Dividend paid	(2,560)	-
Share buy backs	(2,910)	(885)
Net cash flow from/(used in) financing activities	19,375	(931)
Net increase/(decrease) in cash and cash equivalents	1,182	(271)
Effect of foreign exchange	122	385
Cash and cash equivalents at 1 November	2,110	1,996
Cash and cash equivalents at 31 October	3,414	2,110

The notes form part of these financial statements.

*Receipts from the disposal and purchase of investments have been classified as components of cash flows from operating activities because they form part of the Company's operating activities.

NOTES

For the year ended 31 October 2017

1. REPORTING ENTITY

Aberdeen Emerging Markets Investment Company Limited (the "Company") is a closed-ended investment company, registered in Guernsey on 16 September 2009. The Company's registered office is 11 New Street, St Peter Port, Guernsey, GY1 2PF. The Company's shares have a premium listing on the London Stock Exchange and commenced trading on 10 November 2009. The Company changed its name to Aberdeen Emerging Markets Investment Company Limited on 14 April 2016. The financial statements of the Company are presented for the year ended 31 October 2017.

The Company invests in a portfolio of funds and products which give diversified exposure to developing and emerging markets economies with the objective of achieving consistent returns for shareholders in excess of the MSCI Emerging Markets Net Total Return Index in Sterling terms.

Investment Manager

The investment activities of the Company were managed by Aberdeen Fund Managers Limited ('AFML') during the year ended 31 October 2017.

Non-mainstream pooled investments ("NMPIs")

The Company currently conducts its affairs so that the shares issued by the Company can be recommended by Independent Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority's rules in relation to NMPIs and intends to continue to do so for the foreseeable future.

2. BASIS OF PREPARATION

(a) Statement of compliance

The financial statements, which give a true and fair view, have been prepared in accordance with International Financial Reporting Standards ("IFRS") and are in compliance with The Companies (Guernsey) Law, 2008. There were no changes in the accounting policies of the Company in the year to 31 October 2017.

Where presentational guidance set out in the Statement of Recommended Practice ("SORP") for Investment Companies issued by the Association of Investment Companies ("AIC") in November 2014 and updated in January 2017 is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

The total column of the Statement of Comprehensive Income is the profit or loss account of the Company. The "Capital" and "Revenue" columns provide supplementary information.

The financial statements were approved and authorised for issue by the Board on 19 February 2018.

This report will be sent to shareholders and copies will be made available to the public at the Company's registered office. It will also be made available on the Company's website: aberdeenemergingmarkets.co.uk

(b) Going concern

The directors have adopted the going concern basis in preparing the financial statements. The Board formally considered the Company's going concern status at the time of the publication of these financial statements and a summary of the assessment is provided below.

The Company will put forward a resolution for its continuation at the Annual General Meeting on 12 April 2018. Following consultations with shareholders the directors have a reasonable expectation that the continuation vote will be passed. The financial statements have therefore been prepared on the basis that the continuation vote will be passed by shareholders. If the resolution is not passed, then within four months of the vote to continue failing the directors will be required to formulate and put to shareholders proposals relating to the future of Company, having had regard to, inter alia, prevailing market conditions and the applicable regulations and legislation.

The directors have a reasonable expectation that the continuation vote will be passed and that the Company has adequate operational resources to continue in operational existence for at least twelve months from the date of approval of this document. In reaching this conclusion, the directors have considered the liquidity of the Company's portfolio of investments as well as its cash position, income and expense flows. As at 31 October 2017, the Company held £3.4 million in cash and £383.3 million in investments. It is estimated that approximately 60% of the investments held at the year end could be realised in one month. The total operating expenses for the year ended 31 October 2017 were £3.6 million, which represented approximately 1.07% of average net assets during the year. At the date of approval of this document, based on the aggregate of investments and cash held, the Company has substantial operating expenses cover.

The Company has a £25 million loan facility with RBS which matures on 31 March 2018. The Company has commenced discussions with RBS and the Board expects to renew the facility on similar terms when it matures.

The directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements and, after due consideration, the directors consider that the Company is able to continue for a period of at least twelve months from the date of approval of the financial statements.

The financial statements have been prepared on the historical cost basis except for investments held through profit or loss which are measured at fair value.

(d) Functional and presentation currency

The Company's investments are denominated in multiple currencies. However, the Company's shares are issued in GBP sterling and the majority of its investors are UK based. Therefore, the financial statements are presented in Sterling, which is the Company's functional currency. All financial information presented in GBP sterling has been rounded to the nearest thousand pounds.

(e) Capital reserve

Profits achieved by selling investments and changes in fair value arising upon the revaluation of investments that remain in the portfolio are all charged to profit or loss in the capital column of the Statement of Comprehensive Income and allocated to the capital reserve.

(f) Revenue reserve

The balance of all items allocated to the revenue column of the Statement of Comprehensive Income in each year is transferred to the Company's revenue reserve.

(g) Use of estimates, assumptions and judgements

The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Use of estimates and assumptions

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described below.

Classification and valuation of investments

Investments are designated as fair value through profit or loss on initial recognition and are subsequently measured at fair value. The valuation of such investments requires estimates and assumptions made by the management of the Company depending on the nature of the investments as described in note 3 (a) and fair value may not represent actual realisable value for those investments.

Allocation of investments to fair value hierarchy

IFRS 13 requires the Company to measure fair value using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements. IFRS 13 establishes a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy under IFRS 13 are as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

Use of judgements

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary and provided by independent sources that are actively involved in the relevant market.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Investments

As the Company's business is investing in financial assets with a view to profiting from their total return in the form of increases in fair value, financial assets are designated as fair value through profit or loss on initial recognition. These investments are recognised on the trade date of their acquisition at which the Company becomes a party to the contractual provisions of the instrument. At this time, the best evidence of the fair value of the financial assets is the transaction price. Transaction costs that are directly attributable to the acquisition or issue of the financial assets are charged to profit or loss in the Statement of Comprehensive Income as a capital item. Subsequent to initial recognition, investments designated as fair value through profit or loss are measured at fair value with changes in their fair value recognised in profit or loss in the Statement of Comprehensive Income and determined by reference to:

i) investments quoted or dealt on recognised stock exchanges in an active market are valued by reference to their market bid prices;

ii) investments other than those in i) above which are dealt on a trading facility in an active market are valued by reference to broker bid price quotations, if available, for those investments;

iii) investments in underlying funds, which are not quoted or dealt on a recognised stock exchange or other trading facility or in an active market, are valued at the net asset values provided by such entities or their administrators. These values may be unaudited or may themselves be estimates and may not be produced in a timely manner. If such information is not provided, or is insufficiently timely, the Investment Manager uses appropriate valuation techniques to estimate the value of investments. In determining fair value of such investments, the Investment Manager takes into consideration the relevant issues, which may include the impact of suspension, redemptions, liquidation proceedings and other significant factors. Any such valuations are assessed and approved by the directors. The estimates may differ from actual realisable values;

iv) investments which are in liquidation are valued at the estimate of their remaining realisable value; and

v) any other investments are valued at the directors' best estimate of fair value.

Transfers between levels of the fair value hierarchy are recognised as at the end of the reporting period during which the change has occurred.

Investments are derecognised on the trade date of their disposal, which is the point where the Company transfers substantially all the risks and rewards of the ownership of the financial asset. Gains or losses are recognised in profit or loss in the capital column of the Statement of Comprehensive Income. The Company uses the weighted average cost method to determine realised gains and losses on disposal of investments.

(b) Foreign currency

Transactions in foreign currencies are translated into Sterling at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated into Sterling at the spot exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value through profit or loss are retranslated into Sterling at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into Sterling using the exchange rate at the date of the transaction.

Foreign currency differences arising on retranslation are recognised in profit or loss and, depending on the nature of the gain or loss, are allocated to the revenue or capital column of the Statement of Comprehensive Income. Foreign currency differences on retranslation of financial instruments designated as fair value through profit or loss are shown in the "Gains on currency movements" line.

Dividend income is recognised when the right to receive it is established and is reflected in the Statement of Comprehensive Income as Investment Income in the revenue column. For quoted equity securities this is usually on the basis of ex-dividend dates. For unquoted investments this is usually on the entitlement date confirmed by the relevant holding. Income from bonds is accounted for using the effective interest method.

Special dividends and distributions described as capital distributions are assessed on their individual merits and may be credited to the capital reserve if considered to be closely linked to reconstructions of the investee company or other capital transactions. Bank interest receivable is accounted for on a time apportionment basis and is based on the prevailing variable interest rates for the Company's bank accounts.

(d) Treasury shares

Where the Company purchases its own share capital, the consideration paid, which includes any directly attributable costs, is recognised as a deduction from equity shareholders' funds through the Company's reserves. When such shares are subsequently sold or re-issued to the market any consideration received, net of any directly attributable incremental transaction costs, is recognised as an increase in equity shareholders' funds through the share capital account. Shares held in treasury are excluded from calculations when determining NAV per share.

(e) Cash and cash equivalents

Cash comprises cash and demand deposits. Cash equivalents, which include bank overdrafts, are short term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(f) Investment management fees and finance costs

Investment management fees and finance costs are charged to the Statement of Comprehensive Income as a revenue item and are accrued monthly in arrears. Finance costs include interest payable and direct loan costs. Performance-related fees, if any, are payable directly by reference to the capital performance of the Company and are therefore charged to profit or loss in the Statement of Comprehensive Income as a capital item.

(g) Financial liabilities

Financial liabilities (including bank loans) are classified according to the substance of the contractual arrangements entered into. Financial liabilities at fair value through profit or loss are measured initially at fair value, with transaction costs recognised in profit or loss in the Statement of Comprehensive Income.

(h) Taxation

The Company has exempt status under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual exemption fee of £1,200 (2016: £1,200).

Dividend and interest income received by the Company may be subject to withholding tax imposed in the country of origin. The tax charges shown in profit or loss in the Statement of Comprehensive Income relate to overseas withholding tax on dividend income.

(i) Operating segments

IFRS 8, 'Operating segments' requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The Board has considered the requirements of the standard and is of the view that the Company is engaged in a single segment of business, which is investing in a portfolio of funds and products which give exposure to developing and emerging market economies. The key measure of performance used by the Board is the Net Asset Value of the Company (which is calculated under IFRS). Therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in the financial statements.

(j) Offsetting

Financial assets and liabilities are offset and the net amount presented in the Statement of Financial Position when, and only when, the Company has a legal right to set off the recognised amounts and it intends to either settle on a net basis or to realise the asset and settle the liability simultaneously.

Income and expenses are only presented on a net basis when permitted under IFRS.

(k) Structured entities

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. A structured entity often has some or all of the following features or attributes; (a) restricted activities, (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors, (c) insufficient equity to permit the structured entity to finance its activities without subordinated financial support and (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks.

The Company holds shares, units or partnership interests in the funds or investment products held in the Company's portfolio. The Company does not consider its investments in listed funds to be structured entities but does consider its investments in unlisted funds to be investments in structured entities because the voting rights in such entities are limited to administrative tasks and are not the dominant factor in deciding who controls those entities.

Changes in fair value of investments, including structured entities, are included in profit or loss in the Statement of Comprehensive Income.

(l) Dividend payable

Final dividends payable to equity shareholders are recognised in the financial statements when they have been approved by shareholders and become a liability of the Company. Interim dividends payable are recognised in the period in which they are paid.

(m) New standards and interpretations effective in the current financial year

In the opinion of the directors, there are no new standards that became effective during the year that had a material impact on the financial statements.

At the date of approval of these financial statements, the following standard, which has not been applied in these financial statements, was in issue but not yet effective:

• IFRS 9, 'Financial instruments', effective for annual periods beginning on or after 1 January 2018, specifies how an entity should classify and measure financial assets and liabilities, including some hybrid contracts. The standard improves and simplifies the approach for classification and measurement of financial assets compared with the requirements of IAS 39. Most of the requirements in IAS 39 for classification and measurement of financial liabilities were carried forward unchanged. The standard applies a consistent approach to classifying financial assets and replaces the numerous categories of financial assets in IAS 39, each of which had its own classification criteria.

• IAS 7 'Statement of Cash Flows', was amended by The International Accounting Standards Board ('IASB') with the intention to clarify IAS 7 to improve information provided to users of financial statements about an entity's financing activities. They are effective for annual periods beginning on or after 1 January 2017, with earlier application being permitted.

The Board is currently considering the impact of the above standard. Based on the initial assessment, the standard is not expected to have a material impact on the Company's financial statements.

4.	INVESTMENT INCOME
		2017 £'000	2016 £'000
	Dividends from UK Investments	2,747	1,328
	Dividends from Overseas Investments	753	1,464
	Total dividend income	3,500	2,792

5.	INVESTMENT MANAGEMENT FEES AND OTHER EXPENSES
		Revenue	2017 Capital		Total		Revenue	2016 Capital	Total
		£'000	£'000		£'000		£'000	£'000	£'000

	Investment management fees	2,695	-	2,695		2,107		-	2,107
	Administration fees	178	-	178		176		-	176
	Depositary and custody service fees	134	-	134		112		-	112
	Registration fees	37	-	37		29		-	29
	Directors' fees	135	-	135		133		-	133
	Auditor's fees:
	Audit services	39	-	39		39		-	39
	Non-audit services	14	-	14		14		-	14
	Marketing fees	179	-	179		61		-	61
	Broker fees	40	-	40		40		-	40
	Miscellaneous expenses	101	-	101		132		-	132
	Total other expenses	857	-	857		736		-	736
	Total expenses	3,552	-	3,552		2,843		-	2,843

Investment management fees

Details of the investment management fee and agreement are provided below.

The Investment Management Agreement is terminable by either party thereto on not less than six months' written notice at any time, subject to earlier termination in certain circumstances including certain breaches or the insolvency of either party.

The Investment Manager is entitled to receive from the Company for its services as Investment Manager a basic fee and, in certain circumstances, a performance fee.

· Basic fee

The Company's basic management fee for the year ended 31 October 2017 was charged at an annualised rate of 1.0% of adjusted market capitalisation, reduced by the proportion of the Company's net assets invested in funds which are managed by Aberdeen Standard Investments ("Aberdeen Funds"). The Investment Management Agreement, in respect of the year ended 31 October 2017, defines the "Company's Adjusted Market Capitalisation" as the aggregate closing mid-market price of the ordinary shares on the last business day of the month or part of a month for which the basic fee is being calculated plus the aggregate amount, if any, paid by the Company in purchasing its own ordinary shares at a discount in the twelve month period ending on such business day.

On 25 July 2017 the Company announced that with effect from 1 November 2017 (the commencement of the Company's financial year ending 31 October 2018) the annual management fee will decrease to an annualised rate of 0.8% of net assets, reduced in the same manner for any investments in Aberdeen Funds.

The basic fee is payable monthly in arrears (and pro rata for part of any month during which the investment management agreement is in force).

· Performance fee

The Investment Manager may receive, in addition to the basic fee, a performance fee in respect of each Relevant Period ending 31 October. It is based on the outperformance of NAV per share (before deducting the performance fee) over the Benchmark NAV per share. The Benchmark NAV per share is the Base NAV per share for the Relevant Period, increased or reduced by the percentage, if any, by which the MSCI Emerging Markets Net Total Return Index in Sterling terms (Bloomberg ticker: NDUEEGF Index) has increased or reduced over the Relevant Period. The Base NAV is the NAV at the commencement of business on the first day of such Relevant Period.

As at 31 October 2017 the NAV per share was 706.04p (2016: 618.79p). The performance fee is 10% of the outperformance of the NAV per share over the Benchmark NAV per share, provided that the NAV per ordinary share has increased since the end of the last period where a performance fee was payable, i.e. the High Water Mark of 559.24p per share (2016: 559.24p). The performance fee calculation is based on figures taken from the audited financial statements.

The performance fee in respect of a particular Relevant Period will not exceed 2% of the Company's Net Asset Value at the close of business on the final Business Day of the Relevant Period to which such fees relate. There was no performance fee in the current year (2016: nil).

As explained in the Chairman's Statement, the performance fee arrangements have been removed with effect from 1 November 2017.

Company Secretary and Administrator fees

Vistra Fund Services (Guernsey) Limited ("Vistra") is appointed as Administrator and Secretary to the Company. Vistra is appointed under a contract subject to ninety days' written notice and receives a fee at a rate of £40,000 per annum plus certain additional fees, as well as the fees payable to the UK Administration Agent.

UK Administration agent fees

PraxisIFM Fund Services (UK) Limited ("PraxisIFM") is appointed by Vistra to act as administration agent in the United Kingdom. PraxisIFM is appointed under a contract subject to not less than ninety days' notice. The UK Administration Agent receives from the Administrator a monthly fee equal to one twelfth of 0.1% of Net Asset Value subject to a maximum fee for the year ended 31 October 2017 of £138,360 (2016: £135,591) per annum. The maximum fee is increased annually, in November, by the change in the UK Retail Price Index (all items) over the preceding 12 months.

Depositary services and custodian fees

Northern Trust (Guernsey) Limited, receives fees for depositary services calculated at the rate of 2.95 basis points per annum subject to a minimum annual fee of £60,000. Northern Trust (Guernsey) Limited also receives a fee for custody services comprising an account fee of £2,500 per account per annum, principal/income split of £1,250 per account per annum and single line items (unit trust) reporting of £500 per line per annum. It also receives an asset based fee equal to between 1.00 basis points and 40.00 basis points of the value of the assets of the Company. Transaction based fees are also payable of between £10 and £125 per transaction. The variable fees are dependent on the countries in which the individual holdings are registered.

The Company's ongoing charges for the year ended 31 October 2017, calculated using the Association of Investment Companies methodology were 1.07% (2016: 1.10%).

6. BANK LOAN / FINANCE COSTS

During the year the overdraft facility with the Northern Trust Company was terminated. In March 2017 the Company entered into a one year £25,000,000 unsecured revolving credit facility with RBS. At the year end, an amount of £25,000,000 was drawn down at an all-in rate of 0.82838% per annum. This draw down matured on 29 November 2017 and was subsequently rolled over at an all-in rate of 1.06125% per annum maturing on 31 March 2018.

	2017	2016
	£'000	£'000
Interest payable	110	31
Facility and arrangement fees and other charges	45	15
Total finance costs	155	46

At 31 October 2017, interest payable of £35,000 (2016: nil) was accrued in the Statement of Financial Position.

7. EARNINGS PER SHARE

Earnings per share is based on the total comprehensive income for the year ended 31 October 2017, being a gain of £46,726,000 (2016: £85,601,000) attributable to the weighted average of 51,346,725(2016: 51,904,033) ordinary shares in issue (excluding shares held in treasury) in the year ended 31 October 2017.

Supplementary information is provided as follows: revenue per share is based on the net revenue loss of £348,000 (2016: £233,000) and capital earnings per share is based on the net capital gain of £47,074,000 (2016: £85,834,000) attributable to the above ordinary shares.

8. DIVIDENDS PAID

The dividends in respect of the year ended 31 October 2017 are detailed below:

Dividend type	Pence per ordinary Share	Capital reserve £'000	Revenue reserve £'000
First interim dividend	5.0	2,560	-
Second interim dividend*	5.0	2,560	-

*Not included as a liability in the accounts for the year ended 31 October 2017 as it was declared and paid after the year end.

9. SHARE CAPITAL

For the year ended 31 October 2017	Authorised	Ordinary shares of 1 p nominal value £'000	Allotted, issued and fully paid	Ordinary shares with voting rights (excluding treasury shares)	Treasury shares
Opening number of shares	Unlimited	546	54,618,507	51,748,179	2,870,328
Purchase of own shares	-	-	-	(551,450)	551,450
Closing number of shares	Unlimited	546	54,618,507	51,196,729	3,421,778


For the year ended 31 October 2016	Authorised	Ordinary shares of 1 p nominal value £'000	Allotted, issued and fully paid	Ordinary shares with voting rights (excluding treasury shares)	Treasury shares
Opening number of shares	Unlimited	546	54,618,507	51,926,229	2,692,278
Purchase of own shares	-	-	-	(178,050)	178,050
Closing number of shares	Unlimited	546	54,618,507	51,748,179	2,870,328

Purchases of own shares

There were 551,450 (2016: 178,050) ordinary shares re-purchased during the year at an aggregate cost to the Company of £2,910,000 (2016: £885,000), all of which are held in treasury.

Share capital account

The aggregate balance (including share premium) standing to the credit of the share capital account at 31 October 2017 was £183,930,000 (2016: £186,840,000).

Ordinary shares

Voting rights

Holders of ordinary shares are entitled to attend, speak and vote at general meetings of the Company. Each ordinary share (excluding shares in treasury) carries one vote. Treasury shares do not carry voting rights.

Dividends

The holders of ordinary shares are entitled to such dividend as maybe declared by the Company from time to time. Shares held in treasury do not receive dividends.

Capital entitlement

On a winding up, the ordinary shares (excluding treasury shares) shall rank pari passu for the nominal capital paid up thereon and in respect of any surplus. Shares held in treasury have no capital entitlement on a winding up of the Company.

10. NET ASSET VALUE PER SHARE

Net assets per share is based on net assets of £361,471,000 (2016: £320,215,000) divided by 51,196,729 (2016: 51,748,179) shares in issue (excluding shares held in treasury) at the Statement of Financial Position date.

The below table is a reconciliation between the NAV per share announced on the London Stock Exchange and the NAV per share disclosed in these Financial Statements.

		2017		2016
	£'millions	pence	£'millions	pence
NAV per share as at the financial year end as published on 1 November 2017 (2016: as published on 1 November 2016)	361.5	706.18	320.1	618.58
Revaluation adjustments - late prices	-	(0.14)	0.1	0.21
NAV per share as disclosed in these Financial Statements	361.5	706.04	320.2	618.79

11. RELATED PARTY DISCLOSURES

Investment Manager

Investment management fees payable are shown in profit or loss in the Statement of Comprehensive Income. As at 31 October 2017, no performance fee accrual has been made (2016: £nil).

At 31 October 2017, investment management fees of £255,000 (2016: £213,025) were accrued in the statement of financial position. Total investment management fees for the year were £2,694,944 (2016: £2,107,317).

Funds held at 31 October 2017 which are managed by the Standard Life Aberdeen plc group

As at 31 October 2017, the Company held investments in Aberdeen Asian Smaller Companies Investment Trust PLC, Aberdeen Latin American Equity Fund Inc and Edinburgh Dragon Trust PLC. The valuation of these holdings at 31 October 2017 totalled £25,722,000.

Directors

Total fees for the Directors in the year ended 31 October 2017 were £135,100 (2016: £133,100).

12. ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held at the Company's registered office on 12 April 2018.

13. FINANCIAL INFORMATION

The Annual Report was approved by the Board of directors on 19 February 2018. The information in this announcement has been extracted from the annual report on which the Company's auditors have given an unqualified report. The annual report will be posted to shareholders and will be made available on the Investment Manager's website at aberdeenemergingmarkets.co.uk. It will also be available from the registered office of Company and the UK Administration Agent.

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

A copy of the annual report will be submitted to the National Storage Mechanism and will shortly be available at: http://www.morningstar.co.uk/uk/NSM

Registered office

11 New Street

St Peter Port

Guernsey GY1 2PF

Enquiries:

Aberdeen Fund Managers Limited (Investment Manager to Aberdeen Emerging Markets Investment Company Limited)

Andrew Lister / Bernard Moody Tel: +44 (0)20 7618 1440

Stockdale Securities Limited (Financial adviser and stockbroker)

Robert Finlay Tel: +44 (0)20 7601 6115

Vistra Fund Services (Guernsey) Limited (Company Secretary)

Lia Rihoy Tel: +44 (0)1481 754147

PraxisIFM Fund Services (UK) Limited (UK Administration Agent)

Anthony Lee Tel: +44 (0)20 7653 9690

Ordinary Shares - Listing Category: Premium - Equity Closed-ended Investment Funds

19 February 2018

END

This information is provided by RNS

The company news service from the London Stock Exchange

END

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